How ‘Catalytic Philanthropy’ Could Solve Global Waste

The world faces a looming challenge of handling our waste, an in creasing percentage of which is made of plastic, which simply does not go away. Plastic usually accounts for up to 20 percent of a municipality’s waste generation by weight, but by volume, the proportion is significantly higher. Most small communities do not have access to solutions, and this is where “catalytic philanthropy,” particularly in the resource recovery sector, can make an enormous impact on peoples’ lives on a global basis.

Catalytic philanthropy refers to an approach in which donors take a structured, active role in addressing some of the world’s biggest challenges. According to one well-known philanthropist[1], it “has the high-stakes feel of the private market, but can transcend the key market limitations above: The investor doesn’t need a share of the benefits.

The idea is to open the mindset of donating to issues that should be solved by small businesses (as opposed to NGOs) in the developing world, where even basic technology, resources, knowledge and funding are not readily available. If donors are willing to give for education and health, why not also give to solutions that can solve problems that affect education and health but that are run as businesses?

These solutions do not usually get funding (due to the local economic conditions or relatively smaller size) or donor support (due to the fact of not being an NGO). This is a gap that particularly needs to be filled in the waste and recycling sector, and catalytic philanthropy is one of the fastest and most efficient ways to seed examples that can be replicated in neighboring communities or jurisdictions.

Waste impacts billions of people on a daily basis worldwide, affecting water quality, health, tourism, fishing, agriculture and natural ecosystems. Yet budgets for keeping a city, municipality, town or village clean are often too small to meet the needs of the waste we generate or are lost to corruption along the way. Waste disposal and recycling is usually seen as a cost to a community, rather than an opportunity for resource recovery and generating revenues. Therefore, the investments needed are easily eliminated or limited by those trying to cut corners and simply do the bare minimum to maintain civil order.

This is one reason why our waters and ocean are polluted much more than they need to be.

A Lack of Tools

Proper waste management (to be called resource recovery from here on)is a social need all governments have an obligation to provide.

With technologies improving for resource recovery, and the ability to make use of many resources as if they were new commodity streams, there is now much less excuse to simply “get rid of waste” by burying it in a landfill or burning it. The perceived old-fashioned mindset that waste has little value, coupled with long-term waste-hauling contracts with little incentive for change, mean that many of the world’s communities lack the necessary tools and capacities to recover, process and extract the value of these materials, thus leaving our communities littered with the afterlife of our consumption.

In developing economies particularly, the haves and have-nots are even more defined, in terms of municipalities that provide their communities the resource recovery options they deserve. This is due to a variety of factors, which include smaller economies of scale, smaller markets, less access to technology (even basic equipment that can bring value to waste streams), less access to funding, corruption and lack of well-written waste-hauling (resource recovery) contracts, which thwart incentive for change.

What most of these smaller and medium-sized communities need is the ability to recover and process their waste, particularly plastic, the ultimate material challenge for today’s waste streams. By allowing these communities to capture value from their materials, they will be incentivized to collect it properly, thus reducing the overall waste burden of the society in a significant manner. The machines and equipment needed to create value need not be high-end or expensive, but without them, it is difficult to bring economies of scale and “worth” to the solution.

Catalytic philanthropy is needed to bridge the funding gap for small businesses and local operators in order to do their jobs effectively if given the equipment. This equipment is usually too “small” to qualify for bank loans or multilateral funding, and it is not something that venture capital or most other investors will seek out – at least until it is proven “at scale.” Only when small communities can be shown to make large, civic improvement with resource recovery, will replication and expansion of these systems, programs and methods take place.

If a donor is going to give money to a school, water sanitation system or other program, why not give that donation to a small company that knows how to make value from this material, effectively providing a social good for the community that the local government could not provide?

Filling a Gap

Until these case studies are shown to others, it is extremely hard for such solutions to be introduced in the first place. Catalytic philanthropy can fill an important funding gap that is critical to fill in the waste sector, which weighs down a high percentage of the world, simply because the capacity and infrastructure are not there to complete the link to a sustainable economic system of value creation.

The challenge, therefore, is to have donors understand the need to be able to donate to companies that know how to run operations that can result in resource recovery that most of today’s public jurisdictions do not have the ability to facilitate.

The sparkplug of innovation will come when these machines and equipment, even at the basic level, are introduced. Without them, they will be hindered by what should be simple improvements in community betterment: clean water; good health; profitable tourism; abundant fishing; civic pride; and good livelihoods.

Without a new funding mechanism such as catalytic philanthropy, it is unlikely that the snowball effect of economic, social and environmental improvement will get the kick-start that it needs to move these solutions along in a much greater fashion than we are seeing today.

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